Achieves 2nd Consecutive Quarter of Net Profit, Excluding Non-Cash Acquisition-Related Charges
Southborough, Mass. - May 8, 2002 - ViryaNet (NASDAQ: VRYAD), a leading provider of integrated mobile and Web-based software applications for workforce management and the automation of field service delivery, today announced financial results of its first fiscal quarter of 2002.
Total revenues were $4.2M for the first quarter, ended March 31, 2002, a 17% decrease from $5.0M recorded for the fourth quarter of 2001, and a 9% decrease from $4.6M recorded in the first quarter of 2001.
ViryaNet reported its second consecutive quarter pro-forma net profit. For the first quarter of 2002, excluding a $480,000 non-cash write-off for in-process research and development related to the acquisition of iMedeon, Inc., the Company reported a pro-forma net profit of $0.1M.
When excluding the effect of the 10-for-1 reverse share split implemented by the Company on May 1, 2002, the net profit of $0.1M translates to a net profit of $0.01 per basic and diluted share, compared to a pro-forma net profit of $0.4M or $0.02 per basic and diluted share in the previous quarter, and compared to a net loss of $7.6M or $0.35 per basic and diluted share for the first quarter of 2001.
Including the effect of the 10-for-1 reverse share split, the net profit of $0.1M translates to a net profit of $0.06 per basic and diluted share, compared to a pro-forma net profit of $0.4M or $0.17 per basic and diluted share in the previous quarter, and compared to a net loss of $7.6M or $3.51 per basic and diluted share for the first quarter of 2001. On a U.S. GAAP basis, the Company incurred a net loss
of $0.3M, or $0.15 per share after the reverse share split and $0.01 per share before the reverse split.
Software license revenue was $2.6M, a 12% decrease from the previous quarter, and a 9% decrease from the first quarter of 2001. Revenue from services and maintenance decreased to $1.5M, a 25% decrease from $2.0M in the previous quarter, and a 9% decrease from $1.7M in the first quarter of 2001.
On a pro-forma basis, the Company reported gross margins of 67% for the quarter, compared to pro-forma results of 65% in the previous quarter, and 48% in the first quarter of 2001. Gross margins from software licenses improved to 88% from 86% in the previous quarter. Services margins declined to 31% from 35% in the previous quarter.
Operating expenses for the quarter were $2.7M on a pro-forma basis, excluding the non-cash write-off for in-process research and development, compared to $2.8M in the previous quarter excluding one-time charges related to restructuring, and $10.0M in the first quarter of 2001.
The Company's available cash position on March 31, 2002, including the full line of credit, was $9.5M, compared to $9.0M at the end of the previous quarter.
"ViryaNet achieved solid quarterly performance, maintaining pro-forma profitability for the second straight quarter, despite the continuing challenge of difficult economic conditions," stated Win Burke, president and CEO, ViryaNet. "We maintained our state of profitability by keeping expenses in check while absorbing the iMedeon acquisition and laying the groundwork for near-term
growth."
Q1 Activities
In Q1, the Company focused on assimilating all operational aspects of iMedeon, a mobile workforce management company located in Alpharetta, GA, that the Company has recently acquired. During the quarter, ViryaNet integrated staff and operations, conducted extensive meetings with customers, solidified relationships with iMedeon's partners, rolled out a comprehensive product integration plan, and increased
its concentration of sales and marketing efforts in the utility market segment.
The Company also expanded its partnerships and extended its distribution capabilities in Europe by forging relationships with such companies as X-Trade, a reseller and systems integrator located in Munich, Germany; mFocus, a reseller and systems integrator located in The Netherlands; and Accenture GmbH, a systems integrator located in Germany. Also brought into the ViryaNet partner community during the
quarter was Mobile Field Engineer, a reseller and ASP provider of ViryaNet applications located in the United States. Mobile Field Engineer recently signed its first customer, which will use the ASP version of ViryaNet Service Hub.
Business Outlook
Although economic indicators regarding a market upturn during 2002 continue to be uncertain, the Company continues to expect revenue to grow to approximately $25M to $26M during 2002, with EPS of approximately $0.09 to $0.10, excluding the impact of the 10-for-1 reverse share split, or $0.90 to $1.00 including the effects of the reverse share split. The Company's expectations for Q2 are for revenues to be
approximately $4.5M to $5.0M, with EPS of $0.00 to $0.01 on a pre-reverse split basis, or $0.00 to $0.10 on a post-reverse split basis, and cash flow to be positive.
About ViryaNet
ViryaNet is a provider of software applications that improve the quality and efficiency of an organization's service operations. ViryaNet's flagship product - the award-winning ViryaNet Service Hub - combines the power of the Internet, the freedom of wireless technologies, and the resources of ViryaNet's deep service expertise to help companies improve workforce scheduling, dispatching, and
activity reporting; customer contract and entitlement automation; and asset, logistics and repairs management.
Customers in the telecommunications, utility, high-technology manufacturing, grocery and retail, insurance, HVAC, and other industries use ViryaNet Service Hub to transition complex service business processes into a manageable, scalable Internet operation, with the goal of increasing service revenues, decreasing service costs, and maximizing customer satisfaction.
Safe Harbor Statement
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: The statements contained in this press release that are not purely historical are forward-looking statements within the meaning of Section 21E of the Securities and Exchange Act of 1934, as amended, including statements regarding ViryaNet's expectations, beliefs, intentions, or strategies regarding the capabilities of its
products, its relationships with its customers, its customer purchases, its future operational plans and objectives including integration of other businesses, its future business prospects, its future financial performance, and its future prospects for profitability. All forward-looking statements included in this document are based upon information available to ViryaNet Ltd. as of the date hereof, and ViryaNet Ltd. assumes no obligation to update any such forward-looking statements.
Forward-looking statements involve risks and uncertainties, which could cause actual results to differ materially from those projected. These and other risks relating to ViryaNet's business include market acceptance of and demand for the Company's products, risks associated with a slow-down in the economy, risks associated with the financial condition of the company's customers, risks associated with competition and competitive pricing pressures, risks associated with increases in
costs and operating expenses, risks in technology development and commercialization, the risk of operating losses, risks in product development, risks associated with international sales, and other risks that are set forth in ViryaNet's Form F-1, as amended, declared effective by the SEC on September 19, 2000, and the other reports filed from time to time with the Securities and Exchange Commission. Reported results should not be considered an indication of future performance. You should
not place undue reliance on these forward-looking statements, which speak only as the date hereof. ViryaNet disclaims any obligation to publicly update or revise any such forward-looking statements to reflect any change in our expectations or in events, conditions, or circumstances on which any such statements may be based, or that may affect the likelihood that actual results will differ from those set forth in the forward-looking statements.